Covid-19 having a negative impact on our business – Independent Media/ANA
ANA and Independent Media |
05 April 2020
Companies respond to press questions over communications to staff (with documents)
Independent Media and African News Agency announce measures to counter impact of Covid-19
4 April 2020
We would like to begin with a public vote of thanks to our editorial teams and support staff who are working painstakingly to continue to bring news to our loyal readers and subscribers and often at risk to themselves. This is as a result of the spread of Covid-19 and the ensuing national lockdown period to contain it.
The lockdown has exacerbated the sluggish economy and has led to a number of media houses experiencing a negative impact on both their advertising and circulation revenue. The South African National Editors Forum (SANEF) also released a statement, earlier this week, calling for continued support for media companies, especially during this time, to mitigate further impact on the industry.
But impact there is. It has affected our businesses too.
Independent Media and African News Agency’s (ANA) senior management teams have already incepted several interventions to ensure the sustainability of these businesses during the Covid-19 crisis and beyond. These include stringent cost reductions across the supplier chain, procurement, logistics, printing and syndication costs.
Salary reductions will also now be implemented with the highest earners required to sacrifice the biggest percentage reduction and the lowest earners being the least affected. Circumstances will be continuously monitored and assessed with interventions modified according to the business environment and business impact. The news was conveyed to staff at both organisations on Friday 3 April 2020.
This was not an easy decision to make or take, but both companies consider the move to be a necessary and responsible approach to safeguarding the employment of the approximate 2000 personnel at these establishments.
It is also a proactive measure, as it is expected that media businesses, like many other businesses and industries, will be impacted for at least three to six months. In making the necessary reforms now, Independent Media and ANA are preparing for the inevitability of a different working world post Covid-19, but one that we trust, will be sustainable for our companies and our staff.
Our communications with our staff have been open, honest and transparent. It has however, become subsequently necessary for ANA and Independent to issue this joint and clarifying public statement, given the wholly inappropriate and insensitive line of questioning the companies have received from some members of the competing media overnight.
Independent Media and ANA jointly denounce the petty attempts by these publications and their journalists, to use our sustainability measures and actions to perpetuate their ongoing smear and propaganda campaign against our businesses and in particular, our executive chairman, Dr Iqbal Survé.
ANA and Independent stand united with all media colleagues across the country and the world. We are all in the same boat and for once, we are all on the same side. #Flattenthecurve.
Our deeply considered and proactive measures to protect our people should therefore be welcomed, and not used to score cheap points for a repeated attack on either company or their Chairman, Dr Iqbal Survé. Sekunjalo Investment Holdings has independently supported the operations of both companies and will continue its efforts to safeguard a free and transformed press in South Africa throughout this process and these challenging times. Dr Survé and the entire Sekunjalo Group, are highly appreciative of the efforts the executives at Independent and ANA have done to secure staff and the Group stands united behind us.
The continued tactics to undermine the Sekunjalo Group and its underlying entities, are divisive and most definitely not in the spirit of unity, which we are all striving for at this juncture.
The media are therefore respectfully requested to refrain from insidious remarks and questioning. They will simply not be entertained, and no response will be given. Genuine questions in the interest of news, we will happily answer.
Issued by African News Agency and Independent Media, 4 April 2020
Letter from Iqbal Surve to staff, 31 March 2020
31 March 2020
I hope this communication finds you and your family well and coping under the most difficultcircumstances and conditions that we have ever, collectively, had to face as a country, even as aworld.
It cannot have escaped you how we are in the midst of a pandemic, which has impacted not justSouth Africa, but the entire globe. To avoid the rapid spreading of the disease to family, friends,work colleagues and our communities, South Africa took the early and bold step to embrace alockdown. This has consequences.
I will not deal with the dangers to the health and welfare of our people since this is, by now, welldocumented. Neither, will I detail in this letter the steps that we need to take to protect ourselvesfrom this virus since this too, is well documented.
I do want to thank those employees who continue to work and put their lives at stake in order toprovide essential services to the broader community. I know that I speak on behalf of the entireSekunjalo Group, when I say that I am sincerely grateful to you for your commitment, dedication andsacrifices that you are making in this regard.
Likewise, it is important to acknowledge and show our appreciation to the hundreds of people at theforefront who are directly impacted by this situation – the healthcare workers, security personnel,drivers and many others who are risking their lives, to make sure our country can function, and thatcommunities are protected as much as possible, against the potentially harsh impact of the virus onus all, especially our most vulnerable of society.
This virus has created a real black swan event – something that was completely unexpected – yet,something that was a known unknown. For a long time, the world was aware that viruses canmutate form animals to humans and create global pandemics. What has made this virus particularlylife threatening though, is not only its ability to spread rapidly but, it does not discriminate – it hasattacked older and immune compromised individuals, as well as young people and those withoutpre-existing respiratory conditions.
It is fair to say that the virus has caused a devastating impact on all of our lives – on our health,welfare, physical and mental wellbeing – and those of our families and friends.
Although we have been fortunate to date in that we have had no persons in our group who havebeen infected, it sadly does not mean we will not be affected in the near future.
There have however, been many other health-related consequences such as stress, anxiety, mentalillness and other issues brought about, in particular, by the lock down of people being confined totheir homes as well as the uncertainty that the virus may bring into their future.
Apart from the huge impact on the health and welfare of our country, the virus has brought about aseverely negative impact on global economies, including South Africa’s. No business will be leftuntouched by this virus.
What we do not know is how severely and for how long, it will impact our businesses. In wealthierand more developed countries, governments have been able to provide aid and assistance tobusinesses and workers, in the form of a significant percentage of the GDP and in some cases, thishas resulted in almost 10% of the GDP. In the case of the USA, the government recently injected $2trillion into its economy with the real prospect of a further $2 trillion if required. The UnitedKingdom and the European Union have, to date, invested almost a trillion Euros into theireconomies. China, similarly, took measures to stimulate and protect both the Chinese people andChinese businesses.
Our government, due to its poor financial fiscal position, has not been able to invest much into theeconomy and in fact, it appears that South Africa is at the bottom of the pile, having only allocated0,1% of GDP to date, to deal with the impact of the coronavirus, compared to economies that havegenerally invested upwards to almost 12% of GDP. Our Finance Minister has already admitted thathe may need to go to the World Bank and the International Monetary Fund (IMF) for assistance.
This, unfortunately, is the harsh reality that we as business and as individuals face. We really are onour own. Whilst there is some support, indicated through the unemployment insurance fund (UIF),it has very clear conditions, which may well not be applicable to most of our businesses and in anyevent, would not have a material impact on our businesses.
All of this means that we have to take matters into our own hands. We have to think carefully andplan scientifically about the impact of this virus on the businesses that we own.
On the one hand, we have always been fortunate as the Sekunjalo Group consists of diversifiedbusinesses in many different sectors of the economy, that generally balance out the status quo ofdaily business. This diversification has meant that over the years, we have been able to weathermany storms.
This time, however, each and every one of our businesses are affected. The diversification whilst itis helpful, does not offer us the same level of protection that we have had in previous economiccrashes, such has the 2008 global financial crash. What we are now witnessing, is effect on bottomline, operations, our employees, our customers and suppliers. No-one has been left untouched.
Our businesses have all been affected to different degrees and extent. Some far more than others,because they may not be deemed essentials services, although even as an essential service, revenuestreams are dry due to shrinking customer bases. A poignant example, is how our loyal advertiserswho want to advertise, are no longer able to do so, because of the lockdown. It is a double-edgedsword.
The end result is that as a Group, we need to make some very difficult decisions.
I have in the last week, spent a considerable amount of time engaging with the senior executivemanagement teams of each of our businesses. This engagement was to establish what would be theimpact of Covid-19 on their respective businesses, and secondly, to ensure that they take all thenecessary safety, health and welfare measures to secure our employees, in compliance withgovernment regulations.
This has been tiring, time consuming and extremely stressful for all of us. Whilst there is greatuncertainty about the black swan environment we find ourselves in, more importantly, there areseveral unknowns about our local and global recovery from this situation.
Scientists and economists have suggested that the economic impact of the virus will be felt for manyyears to come. The immediate bearing is that many businesses will struggle to survive.
I have therefore asked each of the businesses to come up with a short, medium and long-term viewas to the perceived impact of the virus on their businesses and to plan accordingly. This is a verydynamic intervention, in that the executives and I will engage twice weekly, to evaluate whether weare sitting in either one of the three scenarios and what measures we need to take in order toprotect our businesses and employees.
I have asked each of the senior management teams to communicate directly with you and explainthe specific steps that they will take to safeguard their business.
We have a number of objectives in terms of the interventions that we must make.
Firstly, we have to ensure the health and safety of our employees. We are currently in the processof procuring PPE’s and sanitisers for our employees exposed and providing essential services.
Secondly, I have asked senior management teams to look at the measures they can take that do notinvolve direct impact on their employees’ salaries. Where this is not sufficient, to then engage withemployees regarding salary reductions, this is in order to safeguard the business as a whole. Theobjective is to ensure that we have enough liquidity and cash flow across the Group to sustain us forat least six months.
My personal view is that the crisis is at a very early stage in South Africa, and we will only see the fullimpact on the health sector and economy in a few months from now.
Therefore, our planning at a short term should be six months, and the medium term, a 12-monthperiod. These interventions will be scientific, based on data, and be actively managed so that we areable to respond upwards and downwards as needed.
I will lead this initiative with my colleagues and will do so very carefully, taking every considerationinto account. I will continue to update you on what we are doing as a Group. In turn, I will requestthe senior management teams to update you on a weekly basis on the status of these interventions.
We are in a crisis. A very severe crisis. I cannot stress that enough. We have to protect ourbusinesses and like the swift action taken by government to slow the spread of the virus, we have toact fast if we are going to keep our people employed and able to ensure that once the crisis is over,that we all survive.
Of course, some of our businesses are in a stronger position than others. I have made theextraordinary request to senior management from those businesses that are financially sound, toconsider supporting those under more pressure. I have had positive responses from these teamsand Boards of directors, who now work together as a group, and stand united to defeat the impactof the virus.
The reality is that we will need to assess the situation weekly, even daily, and adjust our strategiesand our interventions to take into account this ‘new normal’.
One thing is for certain, everything has changed, forever. Nothing is going to be the same again. Wehave to get used to a world of great uncertainty from a health and economic point of view, a worldwhere people engage differently, and a world where the added value that people want, will be verydifferent than before.
My thoughts are with you at this very difficult juncture in our country.
I wish you safety, good health, continued wellness and I ask that you take all the necessaryprecautions you need to protect yourself and your families.
Dr Iqbal SurvéChairman
Letter from COO Takudzwa Hove to staff, 3 April 2020
Re: Impact of measures by the Government to contain the spread of COVID-19
By now most of us are starting to fully comprehend the impact the coronavirus2 (SARS CoV 2) is having on economic activity on a global scale. In South Africa, the government has implemented a mandatory 21-day lockdown period to slow down the spread of the virus.
Our business falls within the ambit of the gazetted “essential services” industry and as such the Company together with is support structures in printing and distribution have continued trading.
Sadly, our clients on the advertising side of the business have significantly scaled down the scope of their activities. Over the last week, we have seen an increase in the rate of cancelation of advertising bookings that had been previously committed. This is across all sectors with limited advertising coming from the traditional retail sector and the public sector. Single copy sales have also been negatively affected due to reduced foot traffic into the shops.
The revenue levels we are currently achieving are insufficient to maintain our cost structures which were already bloated prior to this event. Early indicators for the month of April per discussions with various commercial heads in the business are that we will miss the revenue targets by as much as 40%- 60% in some sectors.
We reacted to the anticipated revenue declines almost immediately and as from 18 March 2020, the following amongst many measures were put in place:
reduced print orders by eliminating airport copies, copies to schools, other community areas (NIE copies and promotional copies;
reduced pagination across all our titles plus running all our supplements ROP;
reduced the distribution footprint where single copy sales were expected to drop significantly;
evoking force majeure on contractual obligations that can’t be fulfilled due to the lockdown;
suspended use of editorial freelancers, contributors and columnists until the situation normalises; and
various other measures.
Even with the savings from printing and distribution being factored in, we anticipate a significant widening trading deficit. Prior to this, the business already had a trading deficit which was being funded by the shareholders. The business therefore has no room or capacity to cushion the widening trading deficits.
Our payroll bill is one of our highest expenditures. Unfortunately, we are left with no alternative but to take the extreme measure of applying a salary reduction. This will come into effect from this month of April until such a time as the situation has normalised.
Salary reductions will apply to all employee grades as follows:
The final scenario to be applied will be dependent on an additional assessment of performance indicators and trading forecasts of the Group in two weeks’ time i.e. as of 17 April 2020. This will be communicated to all staff via HR by 21 April 2020. Please also contact HR to get a clearer implication on the impact to your take home salary as the impact of these cuts may not necessarily result in a corresponding cut to your actual take home salary.
In addition, the following measures will also be put in place were applicable:
we are exploring suspension of pension and provident fund contributions to leave more cash in employees pockets given the turbulence in the stock markets;
50% reduction for all post-retirement medical aid contributions for retired employees that are still receiving income from us;
medical aid contributions and all risk premiums (Group life cover and disability cover) remain.
We have registered with the Unemployment Insurance Fund to access relief for the salary shortfall via the National Disaster Benefit. The details of which we will provide upon the outcome of our application. Our HR department will provide an update.
There is no better or easier way to deliver such news. The only fair thing we can do is to alert you to this situation as early as possible so that you can make the necessary personal arrangements.
We are in a black swan situation and it is difficult to rationalise what is happening and what will occur next. We are monitoring the business activity on a day to day basis. We need to increase our agility over the next few weeks as the world and the business we have become accustomed to, has changed, forever. These measures are meant to ensure the long-term sustainability of the Group as we are looking at the medium to long term picture of the devastation that will be caused by the corona virus.
I can only hope the situation normalises soon and we can start planning for the world post Covid-19.
The next few months are going to be quite turbulent. I wish you all the strength and resilience we will require to make it through this dark time. Stay safe so that we flatten the curve and control the spread of this corona virus.